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06/28/2011

Releasing Oil from Reserves—Posner

Becker is right to emphasize the role of demand and supply elasticities (how price responds to changes in demand and supply) in the startling fluctuations in the price of oil and oil derivatives such as gasoline, to deemphasize the role of speculation in those fluctuations, and to point out the social utility of speculation.

If the responsiveness of supply to an increase in demand is sluggish, price will rise steeply in the short run, to ration the limited supply among the clamoring demanders—and it will rise especially cheaply if the demanders would rather pay a high price than do without. If demand falls, price will plummet if supply is sluggish, because supply will not fall proportionately to demand—there will be oversupply. An exogenous increase in supply will cause price to drop sharply because inelastic demand implies that price must fall very far to attract purchasers for the additional demand, and thus clear the market. Increased demand or reduced supply will also have sharp effect, though in the opposite direction. So the dramatic fluctuations in oil prices that Becker documents do not require the assumption of nefarious activities by speculators.

And, as Becker also points out, those activities are not, in general, nefarious. Without speculation, the only information about values would be supplied by the actions of suppliers and consumers and others in the chain of distribution from producer to ultimate consumer. With speculation, information is often supplied by persons and firms that buy or sell on the basis of their opinion of how prices will change.

Yet speculators can destabilize markets. Speculators are interested in price changes, and know that price changes are driven in part by other speculators. In an asset-price bubble, speculators (and others) buy in the expectation of rising prices, and may believe that the asset is actually overpriced yet they keep buying because they think that other market participants believe (erroneously) that it is still underprice.

The decision of the United States and other countries that have governmental oil reserves to release a total of 60 million barrels of oil (half of it from the Strategic Petroleum Reserve, which is what the U.S. government’s reserve supply of oil is called) could be a shrewd speculation on oil being overvalued. If it is overvalued, prices will fall, so by selling now the countries will receive more income than if they waited. The sale itself, by increasing supply, will reduce the price of oil; these countries are net importers of oil and so would benefit from lower oil prices.

But this is implausible; there is no reason to think oil overvalued. The current high prices reflects the loss of about a million barrels a day of Libyan oil because of the civil war in that country. The reduction is small as a percentage of world output, but the low elasticity of supply enables a small reduction in supply to have a big impact on price. By the same token, the modest release from the reserve—two million barrels a day for 30 days—may have a dramatic though short-term effect on oil prices, an effect that would be extended if we and other countries continued to release reserves. Our Strategic Petroleum Reserve contains more than 700 million barrels, so we could release a million barrels a day for a year and still have almost half the current reserves.

But what is the point of reducing our reserves? They have after all value as a hedge against catastrophic hits to oil supply, such as were caused by Hurricane Katrina and the BP Gulf of Mexico mishap. One possibility is that it is another short-term stimulus measure, such as “cash for clunkers” and the various mortgage-relief programs. The effects of these measures is slight, because businesses and consumers realize that they are short term and so merely alter the timing of purchases rather than increasing aggregate spending. But with the 2012 elections approaching, the Administration has an incentive to create even short-term bursts of prosperity. Consumers are extremely conscious of gas prices because of the frequency with which gasoline is purchased and the frequency with which the retail prices changes, which increases consciousness of gas prices relative to other consumer products. Hence a sudden, sharp drop in gas prices as a result of an increased supply of oil can create a feeling, but only a transient one, of improved economic prospects.

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Bottom line: Exactly because of the rather inelastic supply, whatever oil we suicidal Western nations leave on the table (by reducing our consumption or releasing reserves) will be promptly picked up by the developing world, the BRIC countries, who have plenty of demand but still limited funds to buy the oil, so they will promptly absorb most of what the West releases at the resulting reduced price.

More importantly, the same concept applies to any futile Western world attempts to curb CO2 emissions by restricting use of oil. Whatever oil we Western fools leave on the table will be promptly picked up and burned by the BRIC countries, while the Western world languishes under the expensive alternatives it tries to mandate. End result the same. Whatever oil comes out of the earth, will be burned somewhere on the planet whether the West uses the oil or not. This invariability of total worldwide oil burned will be all the more true under the “peak oil” (i.e. totally inelastic supply) theories promoted by the same groups that typically advocate the West artificially reduce its oil consumption – a totally dissonant ideology.

Or does anyone think that the time will ever come when the Middle East and other oil producing regions will be in a situation to say: “Well, lets stop extracting oil. There are no more buyers. Nobody seems to want it anymore. If we pull it out it will just sit in storage”. The only thing that Western nation attempts to curb oil use will do is shift its use to the BRIC countries who have no time for suicidal policies of making their energy more expensive and their economies less competitive. Thus the convergence between Western fools and emerging BRIC economies will come even sooner. But Westerners deserve that after all because they are fools. Jobs come from participating in a competitive economy. Legislation is unable to create any jobs any more than perpetual motion machines create energy out of nothing.

So, prepare yourselves to become more equal – to the world average that is…

P.S. The total Strategic Oil Reserves amount to about 90 days of consumption. They are unlikely to be able to play any long term role in prices. But let’s see how governments fare as short term speculators. Oil to the people!

Maybe the administration thinks oil is overvalued because the price of its substitutes will decrease more than is expected. For example, the markets seem to be skeptical about the near future of solar power, but some experts think it will achieve grid parity before 2016. (It's already about as expensive as natural gas in some states, and impressive advances in the technology happen seemingly every week.) If the administration agrees with the solar optimists, it could think that oil is overvalued because its putative future scarcity is inappropriately priced into its current value.

Again, Posner carries water for the monied interests. But, first, what Democrats ought to, but will not learn, from all of this.

Democrats should learn (but will not) that the reason why they are in so much political hot water is that they have been totally ineffective at governing. "Big Government" is justified only if it is effective. The Department of Energy was created 35 years ago (and we have spent through its probably trillions of dollars) to solve our energy problems including, the market failure described by Posner (i.e., failure of capitalism) summed up in the statement by Posner that "low elasticity of supply enables a small reduction in supply to have a big impact on price." In sum, Obama is justified in the release because: (1) the markets have failed; and (2) our efforts up to now to govern effectively have failed.

That being said, to be a leader, to operate on the basis of a moral imperative (see generally Boyd, Patterns of Conflict,etc.) Obama ought to release the reserve only if, at the same time, he admits having to do such is because we have not made DOE work, together with acting with real urgency to do something about it. Obama's problem is that he has never apparently had the urge to do and does not understand how to do anything urgently. Thus, the release of the oil reserve lacks the moral component of leadership and (once again) leaves Obama subject to attacks from the likes of Posner, water carriers for the rich. IOW, once again, Obama has snatched defeat from the jaws of victory.

As for Posner't piece, all it is intended to do is subvert Obama; it is nothing but a partisan attack, based on fiction.

For example, Posner states as an absolute truth that oil is underpriced, "this is implausible; there is no reason to think oil overvalued." Really---we have that good a view of the future. Observer thinks not. True, there are a lot of trends that argue for higher oil (and gas prices). However, there are a lot of contrary trends, as well. The better framework is whether we can gain control over the price of oil. All the facts suggest we ought to be able to do such, as a matter of gov't policy, but only if we have a gov't that is effective.

Oil prices are higher primarily for the declining economies of the Western Hemisphere who are losing competitiveness to an emerging world.

If you are the citizen of one of the developing world countries, you now have more oil purchasing power than you ever had, given the great prosperity increases of the past couple of decades. It is only to the declining citizens of the Western world that oil seems to be getting more and more expensive in dollar denominated prices.

The appearance of expensive oil represents nothing more than our increased ability to compete with the West because of our increased prosperity.

But the West can continue to commit suicide if it wants. That will be just fine with us. More oil left for us. Seems like we copied economic liberalization from the west, while the west is copying our past central planning policies. Go figure. I feel sorry for Western citizens. They are in shock and in denial and are more likely than not to continue adopting ever worse policies, asking for help and salvation from their politicians, of all things. Europeans and Americans bamboozled by massages of “Loosing competitiveness? Don’t worry we will fix that through legislation and macroeconomic manipulation.” Political gimmicks that will get nice talking politicians elected on promises of easy lunches under the effectiveness of central planning. We are progressing because we are moving away from central planning, you in the West are moving towards it like moths on a night light. In an ironic recall of Khrushchev I have to say “We will bury you” … by adopting your very invention: capitalism, you fools!

The release of oil is strategy to reduce inflation for the year and lower or eliminate Social Security and government pension increases which will be set in October. It is amazing how no one in the press or otherwise sees this as a possible strategy....eliminating inflation and lowering or eliminating the possible increase in government spending.

Government could attain a measure of control over the price of oil if it would only follow the time honored and proven energy policies of Democratic statesmen like Sam Rayburn and LBJ. Drill, baby, drill.

If this ongoing economic slump is (as I think you have argued before) at least in part sustained by consumer pessimism, what wrong with "creat[ing] feeling, but only a transient one, of improved economic prospects"?

"Bottom line: Exactly because of the rather inelastic supply, whatever oil we suicidal Western nations leave on the table (by reducing our consumption or releasing reserves) will be promptly picked up by the developing world, the BRIC countries, who have plenty of demand but still limited funds to buy the oil, so they will promptly absorb most of what the West releases at the resulting reduced price.

............ "Assuming" one believes something akin to a functioning market exists in oil (which I do not) ANY efforts by the US (who hog/waste 25% of world supply) SHOULD depress world prices, as, apparently did President Carter's response to the oil crisis of his era. (CAFE stds, 55 mph limit, along with Chrysler responding with smaller more efficient cars -- but getting clobbered after they helped to bring prices down to ten bucks/bbl.)

Despite the economy tanking effect of oil price gouging on the US ( the nation MOST vulnerable to high oil prices with our using double the oil per dollar of GDP as Europe, with Japan and other nations being even more efficient in oil per GDP ratios, are you trying to make a case for exorbitant oil prices being "good" for the US by "freezing out" those economies that are far less dependant on oil than is the US???

As for "inelastic supply??" Is there anyone who subscribes to such a belief? We KNOW that high prices spurs costly shale frakking, and well spur political decisions toward yet riskier development such as "offshore" under the ice pack in the Arctic and other such bottom of the bbl efforts.

What all should know, is not the date of "peak oil" but the day when the soaring demand curve does depart from the production curve even if both are on an upward trajectory. Just imaginge what our WS parasites can do with THAT set of actual fundamentals!

Then your scenario of?? say, the US no longer needing oil imports with oil going to the developing nations at a cheaper price??? So what???? Truth is we AND they would be better off with lower oil prices --- we WANT "them" to have discretionary income with which to buy more of their own production, some of our production and have some left for travel as well.

Well, Professor Posner: IF the Fed intervened to lessen "inflation" and further depress working folk's wages I suspect you'd be all over it.

As for the Admin deciding to intervene in the oil mess? It's likely that this literate group less than fully owned by big oil sense as do I, that it's either "irrational exuberance" or organized complicity that has driven the oil futures ""market"" to such unjustifiable (on the fundamentals) heights.

By unleashing even these small quantities it's bound to dampen some of the "speculators" and perhaps give a few of 'em something to remember. Once an "overexuberant" market is reversed the bears may take it lower. Then...... consider, what even a small decrease in oil prices means to our overall economy, prices of things of high energy content and our strapped (former?) middle class who in the short run are powerless to defend themselves from the gouging.

With complicity from the Reagan, Bush and GW admins it's almost as if we were tee'd up for the screwing we're now receiving. Time for C H A N G E.

Pradeep? "Oil prices are higher primarily for the declining economies of the Western Hemisphere who are losing competitiveness to an emerging world."

.........."Interesting". Perhaps you can explain the economic principles involved?"

......... as for "feeling sorry for westerners" if you've limited quantities of "sorry" to disperse there seem many places far more deserving.

Not sure where you live, but, at times, the US along with many other developed nations does function as something of a democracy and a capitalist economy. While our admins and overly compensated "captains of industry" have long been negligent in assuring diverse supplies of energy, once awakened they, and we, can respond quickly and effectivily. It's been quite a while since we've had to respond to oil price gouging, and nearly as long too, since we've had an admin not fully owned by international oil companies, but the egregious gouging is doing a fine job of providing the political framework for an admin owing little to the oil cartels to lead the way to where we should have been going for several decades.

Anyway, best wishes!

Tanstaff: Ummm the era of Rayburn and LBJ was QUITE some time ago......... many will recall our providing some 75% of the oil we consume/wasted in those halcyon days of cheap and readily available oil. Not so today and the "drill baby" math is about as silly as the carpet bagging Alaskan embarrasment whose handlers coined it.

Try to consider: With the US producing but 30% of our consumption, a domestice increase of say 20% shrinks to but 6% or our overall consumption and less than 1% of, price setting, world consumption. Seems kinda fruitless, eh?

Tom! Indeed! When up against the 20 yard line with time short, even a Hail Mary punt is not a bad idea!

Jack,
I have a suggestion for you that will make your automobile run like your model of the economy:

A) Put an electric motor on your car to turn the wheels

B) Take two wires from your existing electricity producing alternator and connect them to the motor

C) Briefly start the engine (stimulus)

As soon as the car starts moving, the alternator will produce electricity and the electric motor connected to it will start propelling the car even faster. The faster the car goes the more electricity the alternator produces the more the motor accelerates the car. After a mere few seconds of this virtuous cycle, you can turn off the gas engine and let the alternator feed the motor in a virtuous cycle of energy created by the alternator and consumed by the motor, the car happily moving down the road in perpetuity. Thus a small 10 second gasoline “stimulus” is all you need and the car will then go on and on for hundreds of miles – in perpetuity really if you do not stop it. Actually you don’t even need the gas engine at all. Just push the car a bit until a trickle of electricity comes out of the alternator to start the virtuous cycle. No engine no gas no problems. Just an alternator and motor connected to each other in a virtuous cycle.

This is your model of the “economy” and the dynamics of production, compensation, expense, and prosperity.

Apparently no one has invented the above automobile like no one has apparently had the brilliance to set in motion your prosperity generating trifle. Your suggestions are essentially variations of this pointless theme.

This is because the “economic” theories you present are like a physics book that starts with the phrase: “Assume energy generated out of nothing”. Anything that follows such a statement is invalid.

You only provide an interesting example of the sophomoric perpetual motion machines of prosperity through which enough people can apparently be bamboozled into decline. I never expected that so many Americans would be so naively oblivious to what made America the most prosperous country amongst 200. I thought you actually valued the very capitalism that made you so prosperous. But apparently nothing lasts forever, especially if you do not appreciate it. Watching America’s decline form a distance, it is all almost entertaining. Keep copying the very central planning and redistribution policies that we seem to finally be getting rid of. What’s next? The joint 5-year Brezhnev-Obama plan for centrally organized prosperity? Your future is really bright!

But don’t worry Americans. You will continue to be the most prosperous country on earth. Let’s call it “momentum economics”.

Pradeep, And what is India going to do when we pull the Foreign and Economic aid plug to help balance our budget. You guys really need to learn to stand on your own two feet. That is, if China doesn't cross the border and overrun the Subcontinent. I'd be more concerned about the massive increases in China's military budget (approx. 71% in the last couple of years) than the current U.S. economic issues which are rectifiable.

US foreign aid to India, whatever it is, is less than $285 million (does not even appear on the top 25 recipients list).

http://en.wikipedia.org/wiki/United_States_foreign_aid

By comparison, India’s GDP is 1.5 trillion (and rising at 8% per year). That means that US foreign aid to India, whatever it is, is less than 0.02% of Indian GDP. Does anyone think that might be a significant factor affecting India’s economic trajectory?

By the time my Indian cousins reach a mere half of your production/prosperity levels, India will already be an economy twice as large as the US. Add to that China and you see the economic insignificance you are headed towards.

China will not bother India. India has nuclear weapons and, more importantly, China has little reason to hamper its economic ascension by engaging in conflicts. Let the US and Europe engage in that since, apparently they think they can afford it, growing at 1-2% against the backdrop of 3 billion people growing at 6-8% compounding year after year. Once China becomes the dominant economy, things may change of course, and China may yet become more assertive militarily, but nuclear weapons guarantee peace, though the catastrophic consequences the small probability of their use carries, is certainly still the dominant existential challenge for humanity (no its not Global Warming, in case you wondered). Global warming is just another suicidal fixation that you westerners believe can afford to worry about because according to the naivete and delusion of current Western luxury:

“… our human descendants who will live twice as long as we do today (follow the historical human trendline) and be 7-20 times wealthier (again follow the historical human trendline) will have to live in a world 2C warmer and will be terribly inconvenienced by it??! So we now have to inconvenience our relatively much shorter and much poorer lives to accommodate people in 100 years who will be many-many times luckier than we are by living twice as long, be 10 times wealthier and have access to things we cannot even imagine.”

The very fact that you even consider the hubris of addressing problems the much longer lived and much wealthier people 100 years down the line might face if tecnological and economic progress defies all previous experience and grinds to a near standstill for the next 100 years, is indicative of how the west is lost in denial and delusion about where its headed not in 100 years, but in 5-10-20 at the most.

But do go ahead force everyone to buy energy at 5 times the normal free market cost and declare class warfare against your most capable people. I’m sure that is the path to prosperity. Train slow on tracks? Mob mandates train run on corn and attacks engineer. But that has indeed been the historical response of countries in decline. The more economically stressed the masses become the more suicidal the policies they press for. So your decline is firmly rooted, so we in the developing world can safely describe the situation with little risk that you may wake up and actually compete with our economic growth. The small minority of agitated tea party supporters is just the predictable and expected scream of a once most prosperous nation headed to economic marginalization.

The bigger question for us in the developing world is: Once we become even a fraction as wealthy as westerners and thus come to dominate the world economy by virtue of our size, will we then stop economic liberalization just like the west has? In other words, will the Useful Idiots within our ranks have a revival? If so, yet some other part of the world will yet pick up the baton of high growth by refraining from central planning and maintaining strong incentives to top entrepreneurship and innovation by letting those who can and do exceptional work keep their exceptional rewards.

Pradeep -- The flaw in your perpetual motion analogy is that of forgetting that human creativity and energy ARE the inputs........ In short as Dylan sings "You've got to serve somebody..........."

http://www.azlyrics.com/lyrics/bobdylan/gottaservesomebody.html

Indeed! As we ARE an economy 75% dependent on consumer spending most of us are "taking in someone's laundry" in a relatively fair exchange with the exception of the deviants of "our?" WS financial industry carving off larded chunks vastly beyond their worth and any benefit to our society.

I'd hoped that your longish response would end with what you think is a better model for a generally mature economy like that of the US?

Do you think we should gear up to export a lot more goods? continue the Repub agenda of pounding down wages until we take back the call center and other biz from India and others?

While we do need to either get off of oil or export enough to cover the recent price gouging........ what else is it that you think we should be doing?

Also, from your rambling second post I do wonder what the great fascination with having the "largest GDP" is about? For example, when or if, China's 1.3 billion shares a GDP equal to that of the US, statistically they'd still have a std of living of about one fourth that of the US. Assuming......... a democracy develops? or they skirt the likelihood of a "bad dictator" gaining power? is it either likely, or wise for them to divert a very hard earned trillion per year in an attempt to match the (foolish) military expenditure of the US?

Why do your future fantasies revolve around a "cold war" mentality that did not bode well at all for the former USSR, or for us?

BTW are you an engineer? Often it is they who like to "project" "trends" of the past into the future. When I was younger many liked to draw up graphs showing how we who once controlled only on horse (or donkey) power would control "infinite" power....... and speed today. But! somehow it didn't quite work out that way, as I suspect will hamper your speculation of living twice as long as today.

"Class warfare on our most capable?" Would those be hedge fund scammers taking advantage of "earning their living" under capital gains tax rates while our cabbies pay a higher rate of taxes? Or? are you referring the the WS "geniuses" whose foolish, greedy and irresponsible actions took down the economies of the world and have thus far avoided being imprisoned by claiming no understanding of what some derivative designing geek did down in their basements? Or? is it those selling our productive facilities back and forth? each time carving off a chunk for themselves and leaving a wasted hulk to sell over seas or that will only operate IF those doing the work take yet another wage reduction?

And WHO is "being forced" to buy oil that a dysfunctional "futures" market has worked up to five or more times production costs? While we can't ALL dump the gas pigs foolishly purchased when oil was $10 or $20 at once do trust that we WILL respond.

As for "suicidal in times of stress?" Any data? When our union folk were at their wealthiest they "thought" they should throw in with Nixon and later become "Reagan democrats". But! when "trickle down - supply side hrsht yielded to massive military spending and we wound up with high unemployment we elected Clinton to replace Bush Sr. Arguably the right move. After eight wasted years of, again, amassing DEBT under the same foolish theories and again massive warmongering expenses we elected President Obama. Not even arguably the far better choice than that of McCain and our yapping ex pageant queen.

But, perhaps you've some examples of your own you'd like to share?

As for "economic liberation??" in the developing world? Well if history is any sort of general guide, I guess I'd note how sweat shops yielded to a labor movement, with a career in mining becoming something other than a death sentence, though this very week we're again faced with a billionaire mine owner having lied about safety issues in order to further enhance his bottom line. So, yes, I think, perhaps soon? hard working Chinese will become discontent with providing wealth to the world while getting little for their sacrifice, and I know from personal relationships that it's already that way in India.

Lastly, I'd urge you to take a look at how long it might take for a small GDP to overtake a much larger one, even IF a 6-8% growth rate can be sustained. Also? Pray! that the $14 trillion economy of the US along with a similar amount from the EU does NOT grow at 6-8% and add another trillion bucks worth of goods to the world wide glut each year.

Cheers and best in your pursuits; after serving in Korea a number of decades ago it has pleased me greatly to see their great strides and improvements in living stds, I wish the same to India, China and all who are struggling to build a middle class standard of living. Jack

Tan.... I don't see NEH's comments as a personal attack. With the US being virtually militarily impregnable (as has been the history of China) he makes a valid point that it's China's neighbors who should be most concerned about their (foolish) diversion of scarce resources to their military generals.

Worse yet, I suppose, would be that the "good emperors" of today be succeeded by one or a few bad emperors who might be inclined to follow in the footsteps of N. Korea or pre WWII Japan, in which case it should be the Chinese people themselves who could be put at great risk. If there is another "Great war" it's likely to be fought in the middle east, India and Pakistan. Let's hope the Chinese build up is defensive in nature to that threat.

we learn the supply and demand in the economics and we know that if the deserves reduce ,the price will rise. and this is an important way to promot the development of the sciety.
Toronto criminal lawyer

"You've got to serve somebody..........." :-) …and this is how you will motivate and unlock human creativity and energy?!?

Take time away from your family to spend it working for some distant unknowns ? Sounds noble, but is this seriously how you people in the west are fantasizing to motivate people to go to work and produce exceptional things; the only outcome that will enable you to maintain your exceptional standard of living? No wonder you’re growing at 1-2%.

But, alas, a tide of 3 billion people around you is growing at 6-8%. Soon, the city upon a hill will be surrounded by rising water. Better start looking for a lifeboat. Sadly, in a predictable repetition of what has typically happened in declining situations, you are crying: “turn left, set course behind the European Titanic”. Amusing economic mirage of a population in denial, bamboozled by politicians selling prosperity based on altruism. When did that work? And how come nobody ever figured that out before? Do you know how many decades have China and India remained stagnant under the mirage of prosperity through mandatory altruism? We are finally coming to our senses and getting rid of that and your great hope is to prosper by adopting it? Good luck west.

Tan, What's an ad-hominem? A personal attack that has no connection to the point or issue at hand? Now did I call any one a dirty name? My point was that there are issues arising on the subcontinent that should be of more concern than the constant snide attacks on the U.S. and it's current economic policy. Such attacks are "sophmoric" at best and do nothing to advance the economic discussion surrounding our current economic problems (now this could be construed as an "ad-hominem"). ;)

Please stop posting---neither of you are fact based nor do you understand the most basic of the many paradoxes of economics, including that what is good for the firm and individual is bad for the economy and vice versa.

Additionally, you never confront the underlying issue--what to do about deflation. Cutting wages and prices doesn't work---everyone else will just to the same, resulting in more defaults, further cuts, etc.

Contrary to what both of you wrongly believe, there are no rules that apply to economics (or life). No "law" gives value to anything. If we only had sea shells to swap for fish, fears, doubts, and uncertainties would still dominant the market every day when buyers and sellers exchanged one for the other.

The fear, doubt, and uncertainty about our "deficits" is the crying of spoiled brats. India and China are growing, but so what. Neither has a monopoly on what tomorrow holds. Who knows. There may two Russians out writing Code right now that lets machines build and repair themselves without any human intervention. Regardless, the moment will be reached in the next 20/40 years,somewhere

At that moment, the billions of people in India and China will find themselves out of work. What will Capitalisim do then for several billion people when there is no work?

Observer: "What will Capitalisim do then for several billion people when there is no work?"

THAT is much of our problem too. Ha! in all the Sci-fi stories once the goods we need sort of extruded themselves out of an automated machine, WE were supposed to live a life of much leisure, recreation, participation in the arts and all.

But! such a future would require some mechanism for us wage slaves to participate in the productivity gains........ something that for the most part ended about 30 years ago.

Productivity? Doubled. "Average wages?" Doubled. Median wage for most working folk? Flat, and worse for low income folk.

And the litany continues. Pound down wages to "make us competitive" while income disparity continues with CEO's going from 30 times worker pay to over 400 times, with most of the productivity gains going to an "owner" caste from .1% to 5%, while Repubs insist on continuing the utterly unaffordable Bush tax cuts for them.

IF a consumer spending economy is to be revived, by one means or another it's LONG past time for something to "trickle down". Flat wages for most surely indicates a flat economy for all.